The EU has threatened to launch a trade war against Britain if it fails to implement checks on goods entering Northern Ireland under the terms of the Brexit “divorce” settlement.
After talks in London ended without a breakthrough, European Commission vice-president Maros Sefcovic said patience with the UK was wearing “very, very thin”.
His warning came after Brexit Minister Lord Frost refused to rule out the prospect that the UK could unilaterally delay imposing checks on British-made sausages and other chilled meats due to come into force at the end of the month.
Following three-and-a-half hours of discussions at Admiralty House, Lord Frost accused Brussels of adopting an “extremely purist” approach to the implementation of the Northern Ireland Protocol in the Withdrawal Agreement signed by British Prime Minister Boris Johnson.
Mr Johnson insisted he was "very optimistic" that the situation could be resolved and it was "easily doable", although he did not give any explanation of how.
"What we want to do is make sure that we can have a solution that guarantees the peace process, protects the peace process, but also guarantees the economic and territorial integrity of the whole United Kingdom," he said.
In a press conference afterwards, Mr Sefcovic insisted the EU has shown “enormous patience” in the face of “numerous and fundamental gaps” in the UK’s compliance with the agreement.
He said that any further backtracking will be met with a resolute response.
“Of course, as you would understand, the fact that I mentioned that we are at a crossroads means that our patience really is wearing very, very thin, and therefore we have to assess all options we have at our disposal,” he said.
“I was talking about the legal action, I was talking about arbitration, and of course I’m talking about the cross-retaliation.”
His warning came as President Joe Biden’s national security adviser, Jake Sullivan, said the US does not want to see any action that would put at risk the Northern Ireland peace process, which the Protocol is designed to protect.
Ahead of Mr Biden’s meeting with Mr Johnson tomorrow, before the G7 summit in Cornwall, Mr Sullivan said it is up to the two sides to find an agreed way forward.
“President Biden believes and has said that the Northern Ireland Protocol, as part of the agreement between the UK and the European Union, is critical to ensuring that the spirit, promise and future of the Good Friday Agreement is protected,” Mr Sullivan told the BBC.
“That being said, of course the UK and EU need to work out the specifics and the modalities on that, need to find some way to proceed that works both for the EU and the UK.
“But whatever way they find to proceed must, at its core, fundamentally protect the gains of the Good Friday Agreement and not imperil that.”
A Government statement issued after the Admiralty House meeting warned of "disruption to critical supplies such as medicines" without "urgent" progress.
Lord Frost insisted there is still time to reach an agreement before the current "grace period" for chilled meats ends, but said the UK will consider "all options" if it proves impossible.
A senior source later confirmed that includes the option of extending the grace period unilaterally.
"The PM has been pretty clear that he can't see a reason why we shouldn't be able to sell the British banger in Northern Ireland. The biosecurity risk is zero. We don't see why there should be a problem with that," the source said.
Under the terms of the Protocol - which is intended to ensure there is no return to a hard border with the Republic - Northern Ireland remains part of the EU single market, which in turn requires checks on some goods coming from the rest of the UK.
It has however resulted in renewed tensions - particularly among Unionist communities, who fear it represents a weakening of Northern Ireland's place in the UK.
Lord Frost said negotiations will continue in an effort to find "pragmatic solutions" to their differences.
"What we really now need to do is very urgently find some solutions which support the Belfast Good Friday Agreement, support the peace process in Northern Ireland and allow things to return to normal," he said.
"What the EU is insisting on is we should operate the Protocol in an extremely purist way. The reality is that it's a very balanced document that's designed to support the peace process and deal with the very sensitive politics in Northern Ireland.
"It's obviously best to find a negotiated agreement if we can, and that's what we are really intending to do.
"If we can't, and we're working very hard to do it, then obviously we consider all our options for next steps."